Argosy University doctoral student Pamela McCullough gathers her folders, including transcripts, on March 7, 2019, before leaving campus after learning the school is closing. She was set to graduate in May.

Argosy University doctoral student Pamela McCullough gathers her folders, including transcripts, on March 7, 2019, before leaving campus after learning the school is closing. She was set to graduate in May. (Abel Uribe/Chicago Tribune)

Argosy University in Chicago likely will close Friday, days after being cut off from federal financial aid over its mishandling of the money and facing possible sanctions from the state.

The private institution, headquartered in California but with campuses in 11 states, announced this week it would have to shut down Friday unless it could find a buyer or an outside institution willing to take over its programs.

Many students said they were caught off-guard by the announcement, and at the Chicago campus on Michigan Avenue Thursday, students were frantically trying to obtain copies of their transcripts while several people were seen leaving the building carrying boxes and stacks of books.

Pamela McCullough, who is pursuing a doctorate in education, said she only learned of the likely shutdown Wednesday evening. She was presenting parts of her dissertation when she and classmates received the notice from campus President Kevin Beaver saying the school was “at risk of closure this Friday … because of financial constraints.”

McCullough, of Park Forest, said numerous students were crammed in Argosy’s offices trying to obtain their student records and information about transferring to another institution. She was due to graduate in May.

“It is devastating,” she said. “I cried all night.”

The financial problems of Argosy’s parent company, Dream Center Education Holdings, deepened last week when the U.S. Department of Education announced it no longer would provide financial aid to the private university because it had failed to properly administer the money in what the department called “a grievous breach” of the university’s responsibility.

Abel Uribe/Chicago Tribune

About 700 students attend Argosy University's Michigan Avenue campus, according to the Illinois Board of Higher Education.

About 700 students attend Argosy University's Michigan Avenue campus, according to the Illinois Board of Higher Education. (Abel Uribe/Chicago Tribune)

The department said the university failed to give federal financial aid credit balances to students as required by law and that, after receiving $13 million in federal aid in January, Argosy instead used the money to cover payroll costs and other expenses. The federal education agency called that “a severe breach of the required fiduciary standard of conduct” that “demonstrates a blatant disregard for the needs of its students.”

In the same Feb. 27 letter, the Department of Education notified Dream Center that its request to convert Argosy from a for-profit to a nonprofit university was rejected and that it was ceasing Argosy’s participation in what’s known as Title IV federal student aid programs.

The Department of Education “took this step because Argosy does not meet certain standards, including administrative capability, financial responsibility, and the institution’s duty to use federal student aid program funds only for their intended purpose,” the department wrote in a notice posted to the federal student aid website. “Argosy’s failure to pay credit balance refunds owed to its students and parents demonstrates that Argosy cannot meet the required standards.”

Argosy was given until Monday to file an appeal.

Beaver said in his letter to students and staff that the Education Department’s decision created “financial constraints” that severely curtailed Argosy’s ability to continue operating.

“We have been working since that time to determine the best path forward for students,” Beaver wrote.

He said efforts are being made to help students transfer credits to other schools.

“We are working with students, accreditors, state regulators and the U.S. Department of Education to provide as many options as possible for students, to include transfer to another higher education institution or student loan discharge,” Beaver wrote.

Also in the wake of the department’s decision, Illinois’ higher education board was preparing a hearing to consider whether to revoke Argosy’s authority to operate and grant degrees.

One group of local students, all in the doctor of psychology program, said they are in limbo for the next week as they wait to find out if the American Psychological Association will enable them to transfer their coursework to another school.

“I feel like I’m in the twilight zone. It happened so fast,” said Stephanie Morris, 28, of Schaumburg. “Everything is just really up in the air right now.”

Fellow psychology student Jacquelyn Carlton said she learned of the closure from staff and faculty before receiving official word from school administrators.

“I’ve been going through the seven stages of grief every day,” said Carlton, 42. “If I’m not crying, I feel like hysterically laughing because it’s so ridiculous.”

About 700 students attend the Chicago Argosy campus, according to the Illinois Board of Higher Education. It offers bachelor’s, master’s and doctoral programs in areas including psychology, business, education and counseling.

About 54 full- and part-time faculty were employed at Argosy as of fall 2017, the most recent data available.

The nonprofit Dream Center in 2017 acquired the chains of schools operating under the names Argosy University, South University and the Art Institute (which is not connected to the School of the Art Institute of Chicago), intending to transfer them to nonprofit status.